FX.co ★ EUR/JPY Elliott Wave analysis for February 8, 2013

Today's support and resistance levels:

S1: 125.05 R1: 125.92

S2: 124.50 R2: 126.35

S3: 124.01 R3: 126.96

Technical overview:

As expected, support at 125.73 protected the downside for a break above 126.83, but the failure to break above the former top at 127.70 shows us, that the loss of upside momentum is serious. The following break below 125.73 is the first indication, that we could have seen a top for wave 3. If this is the case, we should see minor resistance 125.92 protecting the upside for a new decline below 124.50 and, ideally, below 124.01 to confirm that the top is in place and wave 4 has taken over. However, as long as important support at 124.01 has not been broken, there is a risk of a new rally higher towards 127.70 and possibly even towards the 128.98 - 129.19 area, where we expect a top will be found.

Trading recommendation:

Our stop+revers was taken out at 125.65, which means we should now short EUR and place our stop at 126.25.